Unfortunately, players seem to be actively laying out, but most of them have little effect.
Author | Wen Liang
Edit | Zhang Dong
The cover of Oceans and Civilizations has a sentence to the effect that:
"Although the historical narrative has always been land-centrism, 70% of the Earth's surface is covered by water."
If this sentence is slightly modified, it is also applicable to the current new energy vehicle market, and even the smart car market - although the development of these new species is closely focused on first- and second-tier cities, the vast majority of Chinese residents and land belong to the category of sinking markets.
According to the data, among the 34 provincial-level administrative regions in China, the number of first-tier cities, new first-tier cities and second-tier cities is about 50, and the administrative area accounts for only 5.36% of the total area of the country, and the remaining nearly 95% of the land is pregnant with nearly 1 billion people.
In 2021, Wuling Hongguang MINIEV, the "people's scooter" from Liuzhou, a third-tier city in southwest China, achieved sales of about 430,000 units, close to the annual sales volume of six new car-making forces such as Weilai, Xiaopeng, Ideal, Zero Run, Nezha and Weima.
To a certain extent, the fengshen of Wuling Hongguang MINIEV can be regarded as a commercial miracle created by the huge sinking market composed of the vast majority of low-net-worth people, just like Pinduoduo and Kuaishou in the Internet era. At the same time, it also reflects the imagination space of the electric vehicle market in lower-tier cities.
A huge cake is placed in front of the eyes of new car builders. However, it may not be easy to eat a piece.
New cars attack the sinking market
The sinking market may not be the first choice for most new cars, but it has been radiating endless possibilities in recent years.
From the perspective of market demand, in recent years, the income and consumption expenditure of rural residents have grown rapidly, and even in some economically more developed areas, the income consumption level of rural residents has approached that of second-tier cities. Rising consumption levels have further catalyzed the demand for motorized mobility, but overall car penetration is low – less than 1% of rural residents have electrified vehicles, only 1/3 of urban residents.
Considering the above background, in July last year, experts from the China Electric Vehicle 100 Association made an estimate:
According to the average annual growth rate of 10% in the disposable income of rural residents, by 2030, the number of rural cars per 1,000 people is expected to reach 160, and the total number of vehicles will exceed 70 million, of which the new products are fully likely to be oriented to electric vehicles.
On the one hand, the sinking market is huge, on the other hand, the central market has intensified.
At present, pure electric passenger cars have relatively high sales in the A0 class and B class segments, which is commonly known as the "dumbbell type" distribution structure, but in the foreseeable future, the market will continue to develop towards the "spindle type" distribution, that is, the number of A-class cars in the range of 150,000-25 million yuan is increasing.
At the same time, the penetration rate of new energy in the central market has gradually increased to more than 20%, but as the acquisition of new energy licenses becomes more stringent, the growth rate of the first- and second-tier city market may slow down. The data shows that in the sales of new energy vehicles in 2021, non-restricted cities will contribute about 70% of the share.
As a result, a group of new car players began to seriously think about "sinking".
Take Tesla, for example. As early as the first half of 2020, Tesla announced the central city settlement plan, covering a total of 45 cities in the four major locations of the east, west, south and north of the country, including many low-tier cities such as Jiangsu Yancheng, Shandong Linyi, Guangxi Nanning, jiangxi Ganzhou and so on - which is also interpreted by the outside world as Tesla's sinking plan.
Tesla's sinking ambitions, though, seem to have come sooner. There were rumors that before Tesla China, in order to be grounded, it had sought cooperation from Li Jiaqi and Wei Ya, but in the end, the plan of live selling cars failed, and instead Ofa, Wea sold Tesla's test drive and peripheral products.
In addition to further increasing the exposure of the original product, Tesla also intends to launch a new model that is more affordable to the people.
In September 2020, Musk revealed on Twitter that "we will not reduce the price of the Model 3 to $25,000 (about 160,000 yuan), and we will launch a smaller car than the Model 3 in the future."
According to the new intelligent driving understanding, the new battery pack of this mysterious model is 35% smaller than the model 3 model, and the mileage is expected to be in the range of 260-300 kilometers, positioned as a compact hatchback model, which is expected to be named Model Q.
New cars in China have made similar moves, trying to find more possibilities in the sinking market. Including but not limited to:
On the one hand, Xiaopeng Automobile released the entry-level model P5; on the other hand, it took the lead in laying a sinking sales channel with Zhongsheng Group, which is currently the largest car dealer in China.
Weilai, which has always played the "high-end" brand, generously admits that it is building a low-end sub-brand, the first model is named "Gemini" in English, and the Chinese is named "Gemini".
Zero-run cars use their mini car T03 to open up the sinking market, and said that they will further deepen the service network layout of sinking county-level cities.
Nezha Automobile, which ridicules itself as a "grassroots", has started from the sinking market from the beginning and focuses on cost performance.
At the same time, players have also further laid out experience centers to reach non-first- and second-tier cities such as Liuzhou, Zhongshan, Jingmen, Wuhu, and Luoyang.
A protracted battle
No matter what way you look at it, players are riveting their way into the sinking market. However, it is a little regrettable that players seem to be actively laying out, and most of them have little effect.
After the statistics of the sales channels of new car manufacturers such as Tesla and Wei Xiaoli, some research institutions found that their stores are still concentrated in first- and second-tier cities such as Beijing, Shanghai, Guangzhou, and Shenzhen, as well as economically developed areas such as the Yangtze River Delta and the Pearl River Delta, and the sales contribution still comes from these central cities.
"It is difficult for the new car-making forces to really sink at this stage."
Sun Peng (pseudonym) is very determined, as an electric vehicle enthusiast, he once did sales in a shenzhen direct store of a new car-making force. Behind Sun Peng's steadfastness is the common problem faced by many new cars.
Product positioning
Checking the official website data of Tesla, Wei Xiaoli and so on will find that the price of those highly futuristic and technological automotive products is mostly above 200,000. However, this figure does dissuade a large wave of sinking market users.
According to survey data, only 10% of users in the sinking market have a car purchase budget of 200,000-300,000, while the proportion of consumers with a budget of less than 200,000 is nearly 85%. More importantly, with the decline of subsidies in 2022, many car brands are further increasing their prices.
Zero-run cars tell new smart driving that consumers in the sinking market are more pursuing high-quality-price ratios, are highly sensitive to the practical value of cars, and pay more attention to the transportation function of cars, so the new energy products that currently enter the sinking market are mainly low-end cars.
In non-restricted cities, 58% of users purchased an A00 Class in 2021. As far as zero-running cars are concerned, its mini car T03, which starts at 59,800, delivered a total of 38,463 units last year, "of which first- and second-tier cities account for about half; more and more users in third- and fourth-tier cities like Henan and Shandong." ”
In contrast, most of the new power brands have a big deviation from the consumer demand of the sinking market in terms of product positioning.
At present, the main models of the head camp of the new forces are mostly based on the pure electric models, and most of them are high-end products, and the positioning is also aimed at the consumer groups in first- and second-tier cities that have the demand for additional and exchanged new energy vehicles, rather than the users of the sinking market.
In addition, in central cities such as Beijing, Shanghai, Guangzhou, and Shenzhen, the attributes of automobiles are changing from means of transportation to consumer electronics. Moreover, a more realistic problem is that although the cycle of car companies to launch new models is constantly compressing in the era of new cars, there will be a time difference from the release of new products to the final delivery that cannot be ignored - for example, the gap between the release of the NIO ET7 in January 2021 and the delivery of 2022 is more than a year.
In a sinking market where practicality is paramount, the "pay first, then deliver" approach to new cars may not be very applicable, and people are generally more willing to believe in the sense of security that comes with seeing and believing, rather than buying a future full of uncertainty.
Channel laying
As far as Sun Peng's own experience of receiving guests is concerned, unless there is a considerable focus on automotive technology, a considerable number of guests do not understand the new car companies he serves, let alone the users of the sinking market.
The problem of brand recognition and customer stickiness may be solved by building direct sales stores and experience centers, but other problems will arise. For example, huge costs.
Sun Peng told Xinzhi Driving that in a shopping mall in Shenzhen's non-central area as an example, the monthly rent of new energy vehicle brands is at least 1,000 yuan / flat, which is much higher than other types of stores such as daily chemicals and tea drinks. Moreover, such shops are usually not small in size.
WEILAI, which is known for its user service, may be more representative in this regard. Anecdotal rumors are located in the Weilai Center of Wangfujing Oriental Plaza in Beijing, with a single store area of 3,000 square meters, with a rent of nearly 6 million yuan / month.
This is only the rent, not counting the cost of store construction, decoration and post-operation and maintenance.
Some relevant agencies have calculated that in order to cover the sinking market, car companies need to build no less than 300 sales outlets, and each online store has the radiation capacity of 10 stores.
Even if the rent of supermarkets in the sinking market is cheaper, but the user's purchasing power is relatively weak, the user demand is more dispersed, and whether the profits brought by the order can offset the rent and support the daily operation and maintenance of the store may not be easy to answer.
If you rely entirely on your own strength to build a sales system for the sinking market, it will inevitably bring a heavy economic burden to new car players.
At present, the industry has begun to explore the "direct operation + city partner" model, with car companies providing online support, including but not limited to the choice of interactive, financial, insurance and financial leasing products; partners provide offline product experience, delivery and maintenance services, such as local 4S stores/auto trade cities, or some car sales platforms.
However, it should be noted that this cooperation method requires the new car manufacturers to control the entire link in place, otherwise they may fall into a series of problems caused by information opacity, but damage their own reputation.
Supporting facilities
Even if the product itself and channel problems have opened the door for the sinking of new cars, supporting facilities still greatly affect consumers' purchase decisions, especially the two major challenges of energy replenishment anxiety and worrying retention rates.
As far as new energy vehicles are concerned, charging is an unavoidable topic. At present, the electric vehicles on the market basically use lithium iron phosphate batteries or ternary lithium batteries.
Generally speaking, mainstream new car models tend to use ternary lithium batteries with better performance and higher energy density, and one of the advantages of such batteries is that they have high charging efficiency, but they must be equipped with dedicated charging pile equipment.
However, in the sinking market, it takes a little luck to successfully install charging piles on the parking spaces purchased by home, because it may be resisted by many parties such as properties, power grids, power supply bureaus, etc., and not all families have property rights parking spaces to install household charging piles.
The relatively inexpensive micro-electric vehicles are more likely to use lithium iron phosphate batteries with lower energy density, with lower charging power, and can be charged using 220V for home use. But for car owners who live in high-rise buildings in the community, wiring and charging is obviously not practical.
All of the above highlights the importance of shared charging piles. However, paid services such as overcharge/fast charging/power exchange, which have long become one of the selling points in first- and second-tier cities, are still slowly groping in the sinking market. The distribution density and bad pile rate of public charging piles also greatly affect the overall use experience, making the energy efficiency of new energy vehicles appear inferior to that of fuel vehicles.
It's not just replenishment anxiety, but also concerns about retention rates and resales.
The industry recognizes that the rapid iteration speed of new energy vehicles has also accelerated the speed of their depreciation.
Relevant data show that the resale depreciation rate of new energy vehicles in the first half year is as high as 30%, and the three-year retention rate of pure electric vehicles is generally less than 50%, and even lower than the 5-year depreciation rate of fuel vehicles at the same price.
It is precisely because of this depreciation rate that second-hand cars negotiate new energy vehicle discoloration and worry about hitting their own hands. This phenomenon further limits the possibility of users changing hands on new energy vehicles.
Traditional car companies are strictly guarding against death
Although it has only been more than two months since 2022, new energy vehicles going to the countryside has been listed as one of the key tasks of the government this year.
On February 17, the China Automobile Association has launched the 2022 new energy vehicle model declaration to the countryside, and put forward four basic requirements:
1. Product quality is stable and adapts to rural consumption scenarios;
2. The price range of the declared model is basically the same as that of rural consumers on automobile products;
3. In the next six months, there will be no suspension of production and sale of models;
4. Have a suitable after-sales and sales network.
In fact, as early as 2020, the relevant national institutions began to carry out new energy vehicles to the countryside, and gradually penetrated from third- and fourth-tier cities to townships and rural areas, which caused the sinking market to attach great importance to it.
According to data released by the Ministry of Industry and Information Technology last year:
In 2021, a total of 1.068 million new energy vehicles were sold in the countryside, an increase of 169.2% year-on-year, about 10 percentage points higher than the overall market growth rate, and the contribution rate was close to 30%. Of these, 16 models sold over 10,000 in the first 11 months.
New Intelligent Driving's review of the new energy vehicle activity data in 2020 and 2021 found that traditional car companies are well-deserved main forces - including but not limited to BYD, Great Wall, SAIC, Jianghuai, Dongfeng, Chery and other traditional old car companies, and the vehicles are mostly small and micro cars priced at less than 100,000 yuan and with a cruising range of less than 300 kilometers.
In the list of the first batch of car companies and models participating in the new energy vehicles going to the countryside in 2021, "Wei Xiaoli" was all absent, and only four models of the four new car-making forces of Zero Run, Nezha, Weima and Yundu participated.
For this phenomenon, zero-run cars said that traditional car companies have more scale advantages in production and are more perfect in the construction of channels in the sinking market, so at present, traditional car companies occupy a dominant position in the sinking market.
Taking Great Wall Motor as an example, it not only actively participated in the new energy vehicle to the countryside in 2021, but also participated in a total of 226 local auto shows in this form, and carried out touring exhibitions and fixed exhibitions around the county-level market and township market more than 1,000 times.
According to reports, with the help of new energy to go to the countryside, last year, Euler White Cat, Dongfeng Fengshen EX1, Changan New Energy New Ben (E-Star), Chery New Energy Ant (eQ1) and other models have ushered in a substantial increase in sales.
However, Xu Haidong, deputy chief engineer of the China Association of Automobile Manufacturers, also stressed that the activity is mainly to meet the travel needs of low-income people in rural areas, and will not include high-end models with higher prices in the later period.
Although the development model of Internet e-commerce has confirmed, the sinking market is the next traffic depression. But for most car-building players today, this market doesn't seem to be an ideal country yet.
END
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